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HomeEconomyBond sell-off risks clearing world's most crowded trade - Bank of America

Bond sell-off risks clearing world's most crowded trade – Bank of America

LONDON (Reuters) – Bank of America Global Research said global government bond losses could be the worst year since 1949, with investor sentiment falling to The lowest since the financial crisis was in a note on Friday.

This year’s sharp fall in bonds threatens a credit event and a potential liquidation of the world’s most crowded trades, including bets on the greenback rising to multi-year highs against other currencies and bets on the U.S. currency technology, the bank said. share.

In the week ended Wednesday, bond funds outflowed $6.9 billion, while equity funds outflowed $7.8 billion as investors poured in 3030 billions of dollars in cash, Bank of America said in a research note, citing EPFR data.

Investor sentiment is worst since 2011*) Global financial crisis, report says.

The US market looks set for another volatile day. Wall Street futures fell on Friday as investors fretted about the prospect of an economic downturn and the hit to corporate earnings from the Federal Reserve’s aggressive policy tightening to tame inflation. The S&P 500 is down nearly 5% this month, near its mid-June bear market low.

U.S. Treasury yields, which are inversely related to bond prices, rose again after hitting their highest level since on Thursday, as the U.S. benchmark 2008 – The annual rate of return has recently been around 3.76%.

Bond collapse “threatens liquidation” (the) world’s most U.S. banks, including long dollar and long U.S. tech stocks, wrote.

Major central banks increase sharply to curb inflation interest rates, despite slowing growth, unnerving world markets and sparking a fresh surge in bond yields this week.

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